"Coupang's Misstep in Handling 'Personal Information Leak'... An Opportunity for Competitors and Latecomers" [Click e-Stock]

"Information of 33.7 Million Leaked... The Response Is the Bigger Issue"
"Delivery and Membership War... Potential to Trigger Market Share Reshuffle"

As Coupang's response to the recent personal information leak has been insufficient, securities analysts suggest that this incident could trigger a shift in the landscape of the online retail industry.

On December 26, Nam Seonghyeon, a researcher at IBK Investment & Securities, stated, "The fundamental issue is being revealed in the way Coupang is handling this leak incident."

Previously, Coupang announced that personal information-including names, emails, delivery addresses, and phone numbers-of approximately 33.7 million customers had been leaked. Nam noted, "Although there have not yet been significant additional direct or indirect damages, it is difficult to rule out the possibility of future damages, considering that the personal information of more than half the population was leaked and that the breach occurred between June 24 and November 8."

"Coupang's Overconfidence in 'Lack of Competitors' Leads to Disappointing Response... Government Imposes Strong Sanctions"

First, Nam pointed out Coupang's passive response. He commented, "Coupang has only sent text messages to customers warning them about smishing and phishing and recommending password changes. Given the scale of the leak and the number of users affected, this cannot be considered a proactive response." He added, "This was also evident during the National Assembly audit, and it appears that Coupang is focusing its response on public affairs personnel."

He continued, "The fine imposed on Coupang for this leak could reach as much as 1 trillion won. According to Article 64 of the Personal Information Protection Act, a fine of up to 3% of total sales can be imposed. Based on last year's sales of approximately 41 trillion won, the maximum fine could be as high as 1.2 trillion won."

The government is also taking strong measures. Nam explained, "The chairperson of the Fair Trade Commission has stated that if Coupang fails to take appropriate action, the company could face a business suspension or a comparable administrative fine, and a joint hearing involving five National Assembly standing committees is being planned. He added, "This is a different situation compared to previous leaks involving SKT, KT, and Lotte Card."

Shinsegae, CJ, Naver, and Other Latecomers Form Strategic Alliances... Coupang's Lock-In Effect 'Shaken'

Regarding Coupang's passive response, Nam explained, "First, there are currently no major competitors capable of replacing Coupang's infrastructure. Coupang has invested a total of 9 to 10 trillion won in logistics centers and directly employs about 90,000 to 100,000 people." He added, "Second, considering the scale of employment, the government may find it difficult to intervene aggressively."

However, Nam emphasized, "The strategic alliances of latecomers could become a variable that shakes Coupang's 'lock-in' strategy." He explained, "The online commerce market is undergoing a restructuring, and as strategic alliances form between online and logistics companies, it is impossible to rule out the possibility that major competitors will gain market share. Coupang may have misjudged this situation."

In June of last year, Shinsegae Group and CJ Group signed a business partnership agreement, deciding to outsource the online business unit's delivery services to CJ Logistics. Since this year, with CJ Logistics implementing seven-day-a-week delivery, the delivery service, which was once Coupang's exclusive competitive advantage, has also been strengthened.

Emart recently launched a new online membership service and is reorganizing its existing membership program, which previously focused on discounts and free delivery. The company has shifted to a strategy that aims to lock in buyers by connecting online shopping with other content, and plans to include OTT (online video service) coupons and special partnership deals as part of the offering.

Naver Plus Membership is already pursuing a similar strategy. It offers Naver Points accumulation (usable for Naver Shopping, reservations, travel, etc.), free delivery on select items, offline partnership benefits, and OTT services.

Nam concluded, "The strategic changes among online shopping commerce companies are part of an effort to break Coupang's consumer and producer lock-in and draw users to their own platforms. Considering the possibility of damages to Coupang consumers, limitations in its response strategy, and the potential for seller losses due to declining consumer reputation, it is impossible to rule out the possibility that competitors will gain market share."